By Mark Haranas, on CRN.com Oct 23 2017
In move that gives the networking giant a bigger piece of the unified communications market, Cisco Monday said it will acquire BroadSoft for $1.9 billion as part of its continued software blitz . The blockbuster deal is Cisco’s seventh acquisition this year, including its $3.7 billion purchase  of cloud application and business monitoring provider AppDynamics.
Several Cisco partners, who did not want to be identified, said the deal effectively makes Cisco a major competitor to partners who invested heavily in hosted voice practices. “Cisco is trying to eat our lunch,” said the vice president of sales for a Cisco solution provider, noting the deal raises a channel conflict red flag. “Cisco needs to tell hosting providers like us how we are going to maintain our margins as they become our competition,” he said.
Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 119 on the 2017 CRN Solution Provider 500, said the BroadSoft deal is another sign of the legacy hardware networking provider trying to reinvent itself for a software-defined networking era.
“I guarantee you there are going to be more acquisitions like this from Cisco,” he said. “Software-defined networking is a huge opportunity for partners and customers and it goes completely in the face of what Cisco has created for the last three decades as far as a hardware-based networking world. Cloud has redefined what networking looks like and if Cisco wants to survive as a company, they have to do these acquisitions. They need to balance the combination of doing it quickly and smart so they don’t make a poor decision and overpay and financially hurt themselves and their stockholders.”
The San Jose, Calif.-based network leader is set to acquire BroadSoft for $55 per share or about $1.9 billion cash. The acquisition is expected to close during the first quarter of calendar year 2018.
“We believe that our combined offers, from Cisco’s collaboration technology for enterprises to BroadSoft’s suite for small and medium businesses delivered through service providers will give customers more choice and flexibility,” said Rowan Trollope, senior vice president and general manager of Cisco’s Applications Business Group, in a statement. “Cisco and BroadSoft will deliver a robust suite of collaboration capabilities across every market segment.”
Gaithersburg, Md.-based BroadSoft touts itself as the leader in cloud PBX, unified communications, team collaboration and contact center solutions.
BroadSoft’s cloud business applications and platforms are available through more than 450 service providers in 80 countries. The vendor currently has over 19 million business subscribers.
Venero said the economic impact of the deal on legacy Cisco partners remains to be seen. The big question for solution providers, said Venero, is how does Cisco integrate BroadSoft – which is currently available via telecom and service providers – into their current partner offerings?
“What partners want to know and understand is how they are going to offer this into their current partner ecosystem?” Venero said. “Obviously Cisco is not going to abandon their networking hardware platform. They need to develop a hybrid approach here, integrating BroadSoft into Cisco iOS [networking software for] routers and switches.”
Both Cisco and BroadSoft stock slightly rose Monday morning, with Cisco up 0.70 percent to $34.48 per share and BroadSoft up 1.53 percent to $54.72.
Cisco said combining BroadSoft’s open interface and standards-based cloud voice and contact center solutions delivered through service provider partners with Cisco meetings, hardware and services portfolio will offer best-of-breed solutions for businesses of all sizes and deliver a full suite of collaboration capabilities.
“We chose BroadSoft as it provides a portfolio of cloud collaboration platforms and business applications, which strengthen our cloud investments and ability to deliver collaboration solutions to our global telecom provider customers,” said Rob Salvagno, vice president of Cisco Corporate Development and Cisco Investments, in a blog post. “Cisco and BroadSoft will provide a comprehensive SaaS portfolio of cloud-based unified communications, collaboration, and contact center software solutions and services for customers of all sizes.”
BroadSoft employees will join Cisco’s Unified Communications Technology Group led by Tom Puorro, under the Applications Group led by Trollope.
Last week, Cisco acquired startup Perspica in an effort to enhance its AppDynamics platform and further advance its machine-learning capabilities.
Steven Burke contributed to this story.